A few weeks ago there was a lot of news about comments Rand Paul made in regards to the burden placed on small businesses in mandating non-discrimination. I have a friend who shares the same view that the Civil Rights Act needlessly places a burden on business. While discussing the issue with my friend, and while pointing out the inefficiencies of discrimination, the fact that the market in the 1950’s and 60’s actually valued discrimination, and the countervailing rights of African Americans to effectively participate in commerce, his argument devolved into one simply about the “constitutional right” of a business to function free of coercion by the government. This sort of rhetoric is coming up more and more often, and not just at Tea Party rallies, it happens on the left as well (ie, those who when pushed suggest that they only support a woman’s right to choose because it’s a constitutional right).

A similar, though not constitutional, area where this kind of argument comes up is in the discussion of immigration law. Often, those supporting some of the strongest positions on immigration reform (no “amnesty”, blanket deportation, or support for AZ’s new immigration law), fall back on the argument that illegal immigrants “broke the law” to justify their position. Of course many of these individuals are also OK with speeding, occasionally driving under the influence of alcohol, or participating in the also-illegal and cross-border smuggling of marijuana. Being against something because it’s “illegal” makes for a lazy and poor argument. There are surely other reasons at work when someone falls back on the “it’s illegal” argument, some of it might be racism, but I imagine more of it has to do with perceptions of unfairness in allowing illegals to stay here and have jobs in a tough economic environment, or perceptions of higher crime rates in certain areas, etc.

Most of the time we, as a society, define what’s constitutional and what’s illegal, and the view that the Constitution enshrines business with an inalienable right to not be regulated is just that: a view (and a historically minority one at that). So to argue a policy position based on law or constitutionality is often meaningless, and we should always push past a legalistic justification to the underlying policy rationales of those advocating a position. I’m concerned that this sort of rhetoric actually catches on, and that those who use it aren’t being pushed for the underlying reasons WHY they have the positions they have. (To clarify, I’m talking about those advocating policy positions, and not lawyers and Judges interpreting the law on the books).

Constitutional Rights, and all laws for that matter, don’t exist for the sake of themselves. They embody policy rationales, whether developed according to notions of efficiency, justice, equality, etc. Those who share the view that the Constitution enshrines business with the right to be free from any and all coercion, do so because they see some merit in a society that functions that way (whether it be from the incentives for creation that develop, the way wealth is accumulated, or many other things). Simply saying that they support their position because “it’s a Constitutional Right” masks the real reasons for supporting the position (and the same goes for those who might hide behind “Constitutional Rights” on the left).

I’ve long been a defender of our two-party system. It’s not perfect, but nothing ever is. Those who usually argue for a third party (whether it be the Green, Libertarian, Constitution, or Independent party) usually point out that neither Republicans nor Democrats fit their ideal mold of the policies they support. Maybe they’re with Dems on issues like abortion and gay marriage, but like Republican positions on foreign policy. Or maybe they’re die-hard neo-libertarians and find neither party appealing (though the Tea Party movement may be currently transforming the Republican party in this regard). To this I usually point out that there’s a spectrum of beliefs within both parties, and that usually leads to concessions and compromises within each party and across the aisle, such that legislation ends up having been influenced by all, including those sympathetic to a third-party position. Whereas, wasting resources on a third party campaign means that you may not end up influencing the Democrat or Republican eventually elected to office.

But recently, that sort of compromise and influence hasn’t been the case. Republicans had a great opportunity to influence the Health Care Reform bill in a positive manner, but they chose not to (I don’t consider asking the majority party to throw out their bill and use yours instead a valid attempt at compromise). The bill of course did have to be palatable to more conservative Dems, so significant concessions (like the removal of the public option) were made. Presumably, Republicans found it more beneficial to avoid participation in the bill so that they could rail against it in the election season as a Government takeover of healthcare, even though the bill regulates the insurance market.

Immigration is actually another area where compromise should actually be pretty easy. No one WANTS a flood of illegal immigrants, and only a few want to rip apart productive families made up of a mix of illegal and legal immigrants. A bill that brings together strong border protection with a rational mix of legalization and stronger enforcement should be easy to pass… but even President Bush couldn’t get it done and he had a decent chunk of bipartisan support.

With individualism resurgent throughout the country, the appeal of a third party might be gaining traction. Especially with candidates like Charlie Crist running as an Independent in Florida. But the history of third-party candidacies have usually ended like this: Third Party Candidate runs, siphons votes from similarly-situated Mainstream Candidate, and then other Mainstream Candidate whose views are even farther away from the Third Party Candidate wins. (Think Al Gore and Ralph Nader, or George H.W. Bush and Ross Perot). So really, those who advocate for Third Parties should consider bolstering support for opposing Fourth or Fifth parties. A Third Party on it’s own can’t survive, but a field with 5 different parties would be less affected by siphoning, and people might even be more energized about coming out and supporting candidates they find more in-sync with their beliefs.

That said, I still appreciate the efficiency of having two major political parties rather than a disjointed patchwork of varying parties (parliamentary systems in Europe have a multitude of parties, and they can get quite messy). Multiple parties might mean that it would be easier to get compromises in Congress, but my hope is that sanity returns to congress some time in the near future.

My post a few days ago, Facebook’s Anti-Privacy Monopoly has gotten a lot of attention and I’ve received a lot of valuable Feedback, including from some employees over at Facebook.

To reiterate, I really do like Facebook. It’s a good product and an efficient platform for communication. And to me, personally, the privacy “issues” aren’t so bad as to outweigh the value I get from the site (though I’d still prefer more easily-used privacy settings and more control over certain things). Even the recent instant personalization is a feature I can see liking. I’ve turned it off mostly because of the all-or nothing approach to the privacy settings (I can see liking instant personalization with Yelp since I use both, but don’t really want to have to turn off instant personalization on all the other sites where I don’t want it).

What I’m really trying to do is get people to recognize the commercial nature of the relationship users have with Facebook, and to see the competitive consequences (and thus privacy consequences) of the way Facebook allows (or doesn’t allow) interaction with other websites.

Security
A few people have pointed out that allowing FB users to share usernames and passwords is a BAD idea for Security (and thus also bad for Privacy). The idea is that if you get people too used to sharing their passwords with other sites, then they’ll be more likely to fall prey to phishing scams. That makes sense. Though it’d be interesting to look at some data to determine if that’s actually the case in practice. Login-sharing has been practiced across many websites for a while, and just because a site prohibits sharing of usernames and passwords, that doesn’t mean scammers will just stop trying to solicit them.

Regardless, the anti-competitive concerns I talked about in the earlier post don’t HAVE to be addressed via password sharing, as long as some authentication system allows for interacting and exporting user content much in the same way a third party could with a simple login. This could include some solutions such as xAuth or OpenID, or even a version of the Facebook API where FB doesn’t block Google’s Friend Connect or MySpace.

Spamming and Phishing
I’m also not in love with spammers. I referred to Power.com in my prior post. They tried to develop a platform for easily porting SN content from one site to another. There are also some accusations against them for spamming on FB. They’ve been blocked by FB (and to this day you can’t say “Power.com” on a FB wall post or comment, presumably that’s a pre-emptive attack against SPAM). I don’t know if Power.com is an evil spammer or a legitimate competitor, but I do know that when Twitter first got off the ground a couple of my friends signed up and accidentally spammed everyone in their GMail contact list with invites to join. It’s not impossible that something similar happened with Power.com’s initial roll out. Regardless, even without the spamming component, a legitimate service like what Power.com tries to do isn’t allowed to interact with FB under the current rules of use.

Privacy as Control
Some people have also pointed out that reducing the transaction costs associated with switching from FB to another service actually reduces privacy by spreading information around to more places. I’m actually less interested in promoting switching to other services completely and more interested in the promotion “niche” services (such as the photo-sharing example in my original post). I do think FB is here to stay as the dominant Social Network. But to the privacy point: My conceptualization of privacy on the Internent, and I think that of most others, is one of control. Some friends share more than I do, others feel comfortable sharing less. Just because information is more widely dissipated, that doesn’t necessarily mean it’s less private if I’m sharing it with a service provider that I trust and that I choose.

Unbalanced
I’ve also been told that I was pretty unbalanced against Facebook in my initial post. To that I’d say that I was trying to argue a point: that there are anti-competitive consequences to the way Facebook’s been operating. When advocating a position one tends to be more forceful than not with their language. The book chapter I referenced in the post takes a much more academic-toned look at the economic/privacy issues. On that note though, I do apologize for perpetuating a misquote of Mark Zuckerberg on my graphic, I’ve changed it to reflect what he really said. I encourage anyone who re-posted the graphic to link to the updated copy.

First off, let me just say that I’m a huge fan of Facebook. Let me also say that I think there’s probably only room for one dominant player in the “general” social networking space, and that in the United States, Facebook is likely going to be it. That said, I’m also a huge fan of privacy and of free-market competition. The real reason Facebook’s been clawing back user control over private information, and exposing more and more user info to third parties, isn’t because of some grand shift in social norms or the the conceptualization of online privacy. Rather, it’s simply the result of what happens when a company develops a natural monopoly due to network effects: all of a sudden they can charge more without offering additional benefits. In this case, that “charging” occurs by extracting more value (your private info) from users without offering additional desired benefits or services.

What does that mean? Well, let’s take a look at the graph below that I threw together. A few years ago Facebook and Myspace were engaged in heated competition over users, and Facebook only controlled about 30% of the Market. As the Graph shows, things have changed, with Facebook in control about 84% of the market for “general” social networking today. As Facebook has grown, and as users have become more entrenched, much of the Privacy-friendly functionality used to initially attract users has disappeared. Replaced instead with many public-by-default (if not public-with-no-other choice) options.

What gets me the most isn’t so much that Facebook’s developed a monopoly in this market. As I said, that’s pretty much a given, and user privacy issues aside Facebook’s got a good product to offer. What irks me is the way Facebook’s gone about establishing itself through what I see as anticompetitive practices, specifically, prohibiting users from using their username and password to log in to other websites or services. I’m sure you’ve noticed this. If you want to load or export contacts from G-Mail to most other online services, like Meebo, LinkedIn, etc. You simply share your username and password and the service imports what you want. Various aggregators for content from multiple sites also use this model. But you can’t do this with Facebook, they prohibit it.

Facebook’s long claimed the reasoning behind it’s no-password-sharing policy is user privacy, and to prohibit sharing of user information to third parties without the consent of your friends (ie your friends haven’t consented to you sharing the fact that they’re friends with others). Well that’s clearly hogwash since now who you’re friends with is public information according to facebook. But the no-sharing password policy lives on. Sites and services that desire to interact with Facebook must use “Facebook Connect”, which means you interact with Facebook on Facebook’s terms and using it requires logging in to Facebook FIRST. The effect is to further leverage Facebook’s market power.

Let me put my concerns into a real-world example. Let’s say a user no longer feels comfortable with having their photos on Facebook because of it’s recent privacy-degrading trend. (After all, most of my friends are shocked when I point out that all their photos are now publicly viewable by default.) There’s an incentive there for some other photo-sharing site to develop a tool to help people export photos, but interacting with Facebook through it’s approved channels won’t allow for this. Sharing your username and password with a trusted competitor on the photo-sharing front, however, would. The effect is to create an incentive for Facebook to remain privacy friendly, but Facebook’s basically neutralized the threat of any such competition. They’re also preventing any service that might help you port content from one social network to another (thereby reducing the transaction costs of switching entrenched users from one site to another), and has sued Power.com for trying.

The biggest response I get from people when I point out these arguments is that “you can just delete your account”. But really, no, I can’t. Nor do I want to. I like using Facebook too much, and not having an account would feel like being a hermit. Facebook use is becoming a somewhat integral part of our society. But that doesn’t mean I can’t argue and fight against what I see as harmful anticompetitive conduct that destroys the bargaining relationship between Facebook users and Facebook, Inc.

If this post interests you, I recommend checking out “The Offensive Internet”, edited by Martha Nussbaaum and Saul Levmore when it comes out this November, published by The Harvard University Press.

UPDATE: It was brought to my attention that the graph formerly mis-quoted Zuckerberg. (I actually pulled the quote after checking two sites with a similar mis-quote, which was actually initially someone paraphrasing… not quoting… Zuckerberg).

The Republican strategy to block everything Democrats want to do in Congress has taken a hit with the pending financial reform bill. It’s hard to gather populist sentiment on you’re side when you’re defending the right of giant Wall St. banks to develop completely incomprehensible risk-hiding investment products that make fat-cats billions while driving the U.S. economy into ruin. But that doesn’t mean they haven’t tried.

The most recent attempt to bring populist anger against the financial reform bill has been to characterize it as a “Bailout” for the financial industry. Bailout is a hot word in polito-speak these days, and it’s a powerful one. I mean, we all hate bailouts right? Even Obama derided bailouts during the State of The Union. Even FedEx has tried to disingenuously fight against legislation that would strip away a profitable loophole for them as a “bailout” for UPS. Anti-Bailout fever is taking America by storm! So a Democrat-sponsored bailout for Wall St. seems like a pretty bad idea, so why do they want to do that!?!?… oh wait… they don’t

The strongest (though still weak) argument one can make in characterizing the financial reform bill as a “bailout” involves the FDIC-like $50 Billion fund that would help cover the costs of winding down and breaking up a failing Wall St. bank. Just like the current FDIC fund is used to help cover the costs of winding down failing banks and insuring deposits. A couple things to note: A $50 Billion fund might be enough to bail out a Wall St. Banker but it can’t bail out any of the leading Wall St. banks. So to argue that the money is really going to be used to bail-out all of Morgan Stanley or Goldman Sachs is being pretty disingenuous. Furthermore, the fund isn’t going to be created from general tax-payer dollars. Much like the FDIC it will be developed through levies on Wall St. financial institutions themselves. That’s right, we’re not paying for it, Wall St. is.

The other characterizations of the bill as something that could lead to future bailouts involve the lack of any express provision prohibiting future bailouts. This is a weird argument to make… taken to it’s logical conclusion ANY bill EVER passed could lead to future bailouts, since it doesn’t explicitly bar bailouts. Oh no! That resolution honoring the Girl Scouts? It’s actually a bailout for big cookie conglomerates! Ridiculous right? It’s also silly since Congress is the actor that controls the purse-strings. No branch of the government can just go around granting bailouts willy-nilly. Congress passed the bailouts of the past few years, and Congress can over-turn any language that attempts to limit it’s ability to make future bailouts. (Thats why we rarely see futile language in bills trying to bind future actions of Congress). But if pointless language will bring compromise on this bill, then so be it.

A true “bailout bill” would be to do NOTHING in the context of Financial Reform. This would allow the sort of behind-the-scene risk-hiding derivatives trading that propagated the financial crisis to flourish. Forcing the government into having to choose between bailouts and breadlines once again in the future.

I listened to many of my techie / developer friends last week lament the “evils” of Apple’s restrictive policy involving what apps can exist on the iPad and iPhone. Apple has blocked Adobe’s Flash, and removed Scratch from the iTunes store. Both technologies allow users to create and run their own applications without having to go through the iTunes store and Apple approval. Scratch is specifically targeted towards getting kids to program. The move has really annoyed a lot of developers on both ideological and practical grounds: They’d prefer a more open platform, and they’d prefer not to have to pay Apple fees for the right to develop apps. Many presume that’s what this is about: forcing developers to go through the iTunes store, controlling content, and turning a small profit on developer fees. If only Apple’s goals were so benign. I suspect there’s actually a lot more to Apple’s desire for control in this area, and that to some extent we’re seeing a repeat of the browser wars of the 1990’s (and possibly a similar antitrust lawsuit as the one against Microsoft).

For those unfamiliar with the Microsoft antitrust case, basically, Microsoft saw the potential web browsers had for weakening the role of the Windows Operating System. Bill Gates and Co. realized that in the future, more and more computer use would be accomplished via the web-browser and that as such there’d be less need for computer-born applications, and that web-browser-based applications were not tied to Windows, and thus easily portable to other operating systems. So in order to maintain it’s Windows monopoly, Microsoft tried to monopolize the web-browser market by bundling and promoting Internet Explorer. Needless to say, it didn’t work out so well and Microsoft lost in court.

The case today with Apple is a little different, but the end goal is largely the same. Depending on how you define the relevant market, you could argue that Apple doesn’t have the sort of Monopoly power that Microsoft had (it definately doesn’t have a monopoly on cell phones generally, but it likely has a dominant market-steering role in the smart-phone market… every developer wants to deploy on the iPhone first. Apple is also arguably going much further than Microsoft tried. Whereas Microsoft tried to make IE the dominant browser… Apple is simple forcing everyone to use their underlying program architecture (it would be like Microsoft blocking all other browsers and only allowing Microsoft-approved software on their systems). The outcry would have been ridiculous had Microsoft tried such a thing.

There have been rumors flying around that Adobe might sue Apple over it’s new policy. While it’s uncertain what legal logic Adobe might use, I think there’s a strong argument that Apple might be trying to illegally monopolize the smart-phone market. While it might not have a “monopoly” yet, the iPhone is likely the dominant platform that people make applications for. There’s a reason practically every new mobile app debuts on Apple first: it has the largest app store and a huge user base. Flash and Scratch offer the potential for creating apps that are easily portable from one platform to another (just like the web-browser back in the day). The more Apple can block easy-portability, the more it’s app store grows relative to the others, and then it ends up being only a matter of time before it has a true monopoly.

That said, there’s a decent chance this might not work. Open platforms such as Google’s Android are quickly gaining traction (and the rise of Mozilla Firefox during the browser wars made the war itself moot). While Apple’s goal might be to slow the adoption of programs onto the Android or Windows platforms, it might not happen given today’s pretty quick development cycles. But then if that’s the case, Apple’s making a poor business decision, which it rarely does… so i think there’s legitimate reason to worry.